Forex Slumdog or Millionaire? How To Know If You Have A Winning Forex Trading System

The idea is to use a forex currency trading system that works for you
and that you are good at, not one that you hear works for this or that
trader. If you are don’t have a means to analyzing data effectively or
don’t quite understand the concept of how to select a good trading
system, you will have many other choices to look at.

It cannot be stressed enough that you need to match the forex system up
with your best attributes. If you cannot find something out there that
fits you, why not make up your own and combine the different aspects of
the market that you are successful with.

Can your forex trading system make a profit? When you are trying to
figure out if your forex trading system is profitable, don’t fall into
the trap of thinking that back testing is the best way to go about it.
This is a common error among traders and they couldn’t be further from
the truth. The shortcoming of the system is that it will only look at
the set up that is the most obvious. There may have been another set up
that was a little more difficult to pick up on, but one that was more
dominating and caused losses.

If you are trying to figure out if the system will work, why not
practice with it? Get some real time usage out of it by opening up a
demo currency trading account and see how it performs. You will get
more familiar with it and can get the kinks worked out without costing
yourself some money.

What do the terms expectancy and opportunity mean? Expectancy and
opportunity are two factors that are very important in figuring out if
your trade is going to be profitable or not. Here is an equation for
expectancy: (average win x probability of winning) – (average loss x
probability of losing)

Once you have computed your numbers, hopefully you will have a positive
number. If you don’t, go back and start again because the system that
you are using will have you losing money. That is not what we want,
obviously.

When you get a forex currency trading system that puts out a profitable
number, now you need to know what the opportunity, or how often this
system can be used, is. Take your opportunity factor and multiply the
expectancy factor with it and you will have your long term
profitability of the system. The more you can use it as part of your
forex trading strategy, the higher chance to make money.

What does it all mean? By taking off this data, you will be able to
compute how often and how much profitability this system will possibly
present you with. In this way, you’ll know if your forex trading system
is a slumdog or one that can make you a millionaire.


You can instantly download a simple and proven forex trading system
with my FREE 56-page “Forex Trading To Riches” ebook at
http://www.forextradingpower.com.

The author, Daniel S, is the owner of http://www.ForexTradingPower.com
where you can get free premium forex trading tips and resources.

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